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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market






2. The additional cost incurred from the consumption of the next unit of a good or a service






3. A good for which higher income increases demand






4. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand






5. Demand for a resource like labor is derived from the demand for the goods produced by the resource






6. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources






7. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient






8. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good






9. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices






10. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.






11. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand






12. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability






13. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital






14. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry






15. The change in quantity demanded resulting from a change in the price of one good relative to other goods






16. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.






17. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income






18. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good






19. The marginal utility from consumption of more and more of that item falls over time






20. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good






21. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run






22. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax






23. The total quantity - or total output of a good produced at each quantity of labor employed






24. The difference between total revenue and total explicit and implicit costs






25. The output where ATC is minimized and economic profit is zero






26. Two goods are consumer substitutes if they provide essentially the same utility to consumers






27. The rational decision maker chooses an action if MB = MC






28. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic






29. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.






30. The difference between total revenue and total explicit costs






31. Ed < 1






32. TR = P * Qd






33. The mechanism for combining production resources - with existing technology - into finished goods and services






34. All firms maximize profit by producing where MR = MC






35. A firm that has market power in the factor market (a wage-setter)






36. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur






37. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price






38. Ei = (%dQd good X)/(%d Income)






39. Models where firms are competitive rivals seeking to gain at the expense of their rivals






40. The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization - lower cost of inputs - or other efficiencies of larger scale.






41. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.






42. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0






43. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down






44. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price






45. Entry (or exit) of firms does not shift the cost curves of firms in the industry






46. Exists if a producer can produce a good at lower opportunity cost than all other producers






47. ATC = TC/Q = AFC + AVC






48. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply






49. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter






50. Models where firms agree to mutually improve their situation